Ofcom, the broadcasting regulator, has rejected calls to end BT’s monopoly by forcing the company to sell off its broadband division.

The decision, which comes after a year-long review, has infuriated campaigners who have accused the BT of leaving millions of people with sub-standard broadband connections.

Grant Shapps, a former Conservative Party chairman, said: "Ofcom's continuing reluctance to act condemns hundreds of thousands of people to the slow lane of internet connections, meaning it takes longer to access information, download a movie or run a business from home.

"By now Ofcom should appreciate that high speed broadband is the fourth utility which no modern household should be without.

"You have to wonder how many times BT Openreach has to fail the public before the regulator acts. The idea of one more chance is being stretched to its limit while ordinary families and British businesses continue to suffer through poor or no super-fast broadband.”

Left to right: Sorrel Smith, 18, Nina Smith, 16 and Henry Smith, 13 at Far close farm in Knock, Cumbria. Social networking and doing homework is impossible for them, as there is no proper broadband connectionCredit:
Rii Schrorer for The Telegraph

It comes after 121 MPs from all parties called for BT to be broken up and warned that a “staggering” 5.7million people do not receive the minimum expected download speeds as stipulated by the regulator.

The poor service can leave customers waiting up to two hours to download an hour-long video, and have forced some businesses to close in the worst-affected parts of the country.

The MPs have called for BT’s Openreach division, which owns and maintains the cables and has a monopoly over the network, to be sold off.

However Ofcom, the broadcasting regulator, has recommended the structure of Openreach is reformed rather than split off from its parent company.

Under Ofcom's proposals, Openreach will be forced to make its infrastructure of ducts and poles available to rival companies from next week, and face tough new performance rules that take effect later this year.

But the deal spares BT an immediate break-up of its monopoly over the UK's broadband infrastructure, instead accepting recommendations from BT that Openreach should have an independent board and control over its investment plans.

Openreach will have a say over how it allocates its funding, however the size of its budget will still be set by BT.

"We're pressing ahead with the biggest shake-up of telecoms in a decade," said Ofcom's chief executive, Sharon White, who has previously vowed to take a tough line on BT. "This will make sure the market is delivering the best possible services for people and businesses across the UK."

The move has already infuriated BT's rivals such as TalkTalk, Sky and Vodafone, which have warned that only a forced separation will guarantee that BT does not unfairly profit from it's monopoly over the network.

Dido Harding, chief executive of TalkTalk, which uses the BT network to offer broadband to its customers, said in a statement: “Legal separation still means that a highly complex web of regulation, and BT has proven itself expert at gaming this system.

It provides a poor service to customers and has been starved of investment. The crucial thing is it will leave millions of customers with poor quality broadband.Tim Farron, leader of the Liberal Democrats

“There is nothing to suggest they will not continue to do so in the new system. Structural separation is cleaner, with less red tape. In taking one cautious step forward, I fear Ofcom may in practice have taken five steps back.”

Jeremy Darroch, Sky's chief executive, said the recommendation “falls short of the full change that would have guaranteed the world-class broadband network customers expect and the UK will need”.

He added: “In particular, leaving Openreach’s budget in the hands of BT Group raises significant questions as to whether this will really lead to the fibre investment Britain requires.”

Tim Farron, leader of the Liberal Democrats, criticises BT's running of Openreach. He said: “It provides a poor service to customers and has been starved of investment. Giving more powers and investment to Openreach is better than nothing but the crucial thing is it will leave millions of customers with poor quality broadband.

"That is unacceptable in the modern age when the government claims to be creating a digital economy. If a watchdog yet again fails to bark, perhaps it is time to put it down.”

The regulator, however, is reluctant to push ahead with the break up of BT amid concerns about the impact on BT's £53billion pension fund, which is one of the largest in Britain.

There are also concerns that breaking up BT will lead to a protracted legal battle which could end up in European courts. BT's rivals hope that the vote to leave the European Union will give Ofcom more power and enable it to break up the monopoly.

Gavin Paterson, BT’s chief executive, said the group would invest £6billion over the next three years to improve the digital network. He told BBC Radio 4's Today programme: “It is a sensible way forward. We accept that we can do better and we’ve put forward a proposal that does that.”

Sir Mike Rake, the outgoing chairman of BT, told BBC Radio 4's Today programme: "We believe very strongly, looking at it from a country perspective, that this would be the wrong time to break up BT and would distract us from the remaining investment to get superfast and ultrafast broadband right across the country in the next two to three years.

"We're absolutely willing to form an Openreach board that would have an independent chairman and a majority of independent directors.

“We're willing to give more authority to Openreach in determination of its capital investment programme." He acknowledged that customer service is "not good enough" and pledged to make improvements by bringing call centre staff back to the UK.